The U.S. exit from the Iran nuclear deal creates the risk that Iran will drop out of a separate 50-year-old United Nations treaty meant to stop the spread of atomic weapons, according to Helima Croft, global head of commodity strategy at RBC Capital Markets.
Oil prices have recently surged to 3½-year highs, fueled the U.S. nuclear deal pullout and falling output in Venezuela. However, crude prices began tumbling last week after Saudi Arabia and Russia said two dozen oil-producing nations could soon ease output caps that have been in place since January 2017.
But fears of nuclear weapons proliferation in the restive Middle East could quickly reverse that drop, according to Croft.
An Iranian official threatened last week to pull out of the U.N. Treaty on the Non-Proliferation of Nuclear Weapons, which has sought to prevent the spread of atomic weapons since 1968. Iran signed the treaty that year, but the nation's leadership in Tehran is now in a standoff with the West over its nuclear program after President Donald Trump abandoned the 2015 nuclear deal and restored punishing sanctions on the Middle Eastern country.